Monday, November 12, 2012

Dimon: ‘Every Single Thing About Housing Is Flashing Green’

JPMorganChase CEO Jamie Dimon probably sees more housing data than anyone else in the world.

WSJ reports:

“Every single thing about housing is flashing green,” he said in an interview with CNBC-TV on Friday. “There’s not one thing that’s flashing red.” Household formation is up, housing inventory is down, and housing affordability is at an all-time high, he said. 
Mr. Dimon also noted that while the much-ballyhooed “shadow inventory” of properties that could one day become foreclosures is high, that shadow inventory is declining at a time that banks are getting smarter about foreclosure alternatives such as short sales, where a homeowner is allowed to sell his or her home for less than the amount owed.

Of course, if you were a subscriber to the EPJ Daily Alert, you would have known this months ago. From the September 21 Alert:

 The housing market continues to be the new strong sector.

From the September 25 Alert:
 We have likely seen the bottom in the housing market and it is a good time to buy a house.

From the September 26 Alert:
 The increase in home prices has been supply driven, but if mortgages for new homes continues to climb, it means we will see strength in home prices from the demand side also. If Bernanke's latest money pumping hits the system, housing prices will soar dramatically.


  1. Now we're quoting Dimon in support of our positions? Dimon, the crony-corporatist who has a financial interest in selling the public on any "data" that helps his bottom line? If Dimon came out and said the economy as a whole was doing terrific, everything was just peachy, and we should definitely all pile into stocks because they are all up from here, I think you'd be more skeptical, and all the "well, he really knows the economy" arguments in the world wouldn't convince you.

    This seems like selection bias.

  2. In some areas of the country, I'd agree. The rents on housing are 2-3x sqft higher than what itd cost to take a 30 year mortgage. The question i have is whether anyone but prime borrowers can get these interest rates. Check out Dallas on this. A 3-4 bedroom house would run you at least $1,900-$2,500 to rent when it sells for $300k-$400k. Feels like that's out of whack.

  3. Are the spring loaded interest rates also a green light?

  4. I live in an inner city neighborhood in the Midwest that, while surrounded by typical urban blight, is home to a treasure trove of century-old mansions. While prices have been falling for the past five years and we have our share of vacancies, things are beginning to turn around. Vacant homes in need of renovation are starting to move and homes in ready to move in condition are catching a bid. Of course I expect to see the tax assessor trolling the neighborhood soon as the city fathers have several pointless and costly projects on the drawing board and the city is broke.

  5. I think Bob is simply pointing out that housing prices are going to rise due to central bank policy & govt intervention. The fact that Jamie Dimon is now seeing a green light means that the scheme is working, not selection bias. Just because he uses ABCT doesn't mean quoting a crony invalidates his point, I think in fact it makes it. Dimon isn't saying there's a rebound because of any fundamental change in the economy, he is simply using rebounding housing data to suggest its a good time to buy. Which is exactly what Bob has been stating due to the monetary & govt policies, housing would rebound, but reinflating this bubble has extreme consequences down the road, which Bob also has said. Twisting his comments because he quotes a crony that has noticed what Bob has forecast doesn't change his point.

  6. So what EXACTLY is EPJ so giddy about over rising, and less affordable, housing prices?

    1. Just reporting the facts. What would you like me to do?

  7. But will the percentage rise in housing prices turn out to be lower than the rate of depreciation of money? It seems over time, many hard asset classes may rise in price, but will all of them exceed the inflation rate? The process is uneven so the result should be uneven.

  8. Not for Bob but for Jamie/fed What happens when interest rates rise? What about the 900+ days an average repo in California sits in limbo before the bank actually takes it? Who exactly is going to buy these overpriced homes? I don't see this bubble re-inflating. I think everyone that could have bought a house already has

  9. In the race between monetary inflation matching assets it would be interesting to compare housing increases in markets like DC or San Fran compared to others like Atlanta or Orlando and then further compare them all to gold/silver minus their yearly expenses(like maintenance & taxes).

  10. I would like you to explain the long term relationship between income and housing prices, followed by an explanation of how tor view squares with this. Especially in light of the fact that home buyers buy the payment, not the price. Incomes are down over the last decade and rates are essentially as low as they can go.